by Paul Craig Roberts
Although the financial press speculates about a downgrade of the US government’s credit rating and default if political impasse prevents the debt ceiling from being raised in time, I doubt anyone really believes that the debt ceiling will not be raised. It is just all a part of the political theater of the next couple of months.
Republicans will blame the budget deficit and accumulated national debt on Medicare and Social Security. Wall Street sees billions of profits in privatizing either, and debt rating agencies will oblige their Wall Street paymasters by opining from time to time that US Treasury bonds might be downgraded unless “entitlements can be addressed and the deficit brought under control.”
Democrats will say that the budget deficit cannot be addressed without an increase in tax revenues, especially from the rich whose incomes have exploded upward while their tax rates have declined.
All the while the pressure of an approaching deadline for default will be used to reshape the US social contract, most likely in the further interest of the rich.